President Bush and leading Democrats differed Monday on just how quickly Congress should pass legislation stabilizing the country’s troubled financial system.
Bush issued a statement at the White House saying “the whole world is watching” how the U.S. government addresses the business turmoil that has roiled markets here and abroad.
He spoke not long after the heads of two congressional committees taking the lead on the bill in a crisis atmosphere went on national television to urge that lawmakers work with care, patience and the taxpayers in mind.
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For his part, Bush acknowledged that “obviously, there will be differences over some details, and we will have to work through them. That is an understandable part of the policy making process.”
But he also said “it would not be understandable if members of Congress sought to use this emergency legislation to pass unrelated provisions, or to insist on provisions that would undermine the effectiveness of the plan.”
Some Democrats are seeking, nevertheless, to add provisions to the massive rescue bill, such as limiting pay for executives of the troubled companies in need of the bailout. And Rep. Barney Frank, chairman of the House Financial Services panel, accused Treasury Secretary Henry Paulson of pushing too hard to get out a bill quickly.
Senate Finance Committee Chairman Christopher Dodd said there will be a division of thought in Congress about how best to proceed on a $700 billion bill the administration is seeking to buy up bad mortgage loans that have been weighing down financial companies.
According to The Wall Street Journal’s Web site, a Senate bailout draft could give government shares of financial firms, limit executive compensation for participating firms and create an oversight board with the heads of the Federal Reserve, FDIC and Securities and Exchange Commission.
Meanwhile, the Group of Seven, an organization of the world’s leading economic powers, pledged Monday to do all it could to help ease the crisis. The group said in a conference call that it welcomed the extraordinary steps the United States has taken so far.
Dodd, interviewed on CBS’s “The Early Show,” said many members of Congress believe a legislative relief package also should done in a measured, careful manner and should be tailored to protect taxpayers in the best way possible.
He said they should be “first in line” to get money back once conditions in the industry stabilize and recover.
Dodd, a Connecticut Democrat, said, “We want oversight.”
He added that “the last thing any of us want is to be back here in a month coming up with some new plan because this didn’t work. It’s important that we act quickly, but it’s more important that we act responsibly."
Dodd spoke a day after the government approved a request by investment houses Goldman Sachs and Morgan Stanley to change their status to bank holding companies.
That change will allow the two venerable institutions to set up commercial banks that will be able to take deposits, significantly bolstering the resources of both institutions. It will also grant them permanent access to emergency loans supplied by the Fed rather than the temporary loan status they have had since last March when the Fed moved to prop up investment banks following the forced sale of Bear Stearns.
Paulson and Federal Reserve Chairman Ben Bernanke kept up their outreach with Congress, holding meetings over the weekend aimed at convincing lawmakers to move quickly to approve the relief package.
Frank, D-Mass., said Paulson “is being entirely unreasonable” to expect that Congress will pass a bill right away without examining the proposal thoroughly and adding certain provisions the Democrats want, such as limiting pay for executives of the troubled companies in need of the bailout.
“We want to limit those as a condition for giving them aid,” Frank, D-Mass., told ABC’s “Good Morning America.” “If Secretary Paulson would agree to that, we could move quickly.”
Rep. Christopher Shays, R-Conn., who also serves on the panel, said members “need enough time to debate this” and echoed Frank’s concerns about executive pay. “We don’t have these great golden parachutes and so on. In the end we’re doing it for the taxpayers.”
Frank said that lawmakers “are building strong oversight” into the measure, including establishing an oversight board that will report to Congress at least monthly.
Congressional leaders have endorsed the main thrust of the administration plan, but also have said that it must be expanded to include help for people on Main Street as well as the big Wall Street financial firms who have lost billions of dollars through their bad investment decisions.
“We will simply not hand over a $700 billion blank check to Wall Street and hope for a better outcome,” House Speaker Nancy Pelosi said Sunday in a statement. “Democrats believe a responsible solution should include independent oversight, protections for homeowners and constraints on excessive compensation.”